Hearst buys stake in MediaNews

MediaNews Group Inc. said Monday that Hearst Corp. had bought a stake in the company for $317 million as part of a complex deal between the two privately held publishers involving several San Francisco-area newspapers.

Under terms of the deal, announced last year and completed Friday, MediaNews picked up papers that Hearst bought from McClatchy Co. in exchange for giving Hearst a 31% interest in MediaNews’ operations outside the San Francisco region.

MediaNews disclosed the stake in a filing with U.S. securities regulators Monday.

New York-based Hearst owns the San Francisco Chronicle and MediaNews owns surrounding daily papers such as the San Jose Mercury News, the Contra Costa Times, the Oakland Tribune and others in Alameda Newspaper Group.

The deal, which came about after McClatchy bought former Mercury News and Times publisher Knight Ridder Inc., sews up ownership of nearly all of the daily papers under two owners.

That resulted in a lawsuit by San Francisco real estate developer Clinton Reilly, who contended that the deal would hinder newspaper competition in the region. Hearst and MediaNews settled the suit in April after a federal judge said she would not dismiss Reilly’s effort to sue.

McClatchy sold the Mercury News and the Contra Costa Times to Denver-based MediaNews. It sold the Monterey County Herald and the St. Paul Pioneer Press in Minnesota to Hearst, which then passed them to MediaNews in exchange for the stake.

The papers were owned by Knight Ridder before McClatchy bought that publisher last year.

MediaNews also agreed to take over the Daily Breeze in Torrance from Hearst.